Universities Release Survey on AMCs

Earlier this month, the results of a survey of appraisers and appraisal management companies (AMCs) in Texas were released.

The survey was prepared jointly by the Real Estate Center of Texas A&M University, the Hobby Center for Public Policy at the University of Houston and the National Opinion Research Center at the University of Chicago.

The responses to many of the questions about AMCs and fees are very interesting, particularly those highlighting the apparent differences between appraisers’ and AMCs’ perceptions.  For example, 64% of AMCs indicate that they have seen appraisers turn down an appraisal assignment because the fee is too low, and 22% said they have not seen appraisers turn down an appraisal assignment because of low fees.  Yet 78% of appraisers indicated that they had personally turned down an appraisal because the fee was too low, and only 9% indicated that they had not turned down an appraisal because of fee.

Some of the other AMC responses were also interesting, to say the least.  51% of AMCs surveyed indicate that their fees are higher than other AMCs and only 2% stated their fees were lower than other AMCs.  Even more surprising, 64% of AMCs stated that the fees they pay appraisers are higher than or about the same as the fees being paid to appraisers by lenders.

Here’s the link to the PDF of the entire survey, which can be found online: http://www.talcb.texas.gov/pdf/Texas_Appraiser_AMC_Survey_Report_2012.pdf

Of particular interest are the texts of the open-ended response questions answered by the appraisers, which are found in the appendix to the survey, on pages 68 through 82.

JVI Appraisal Division Defunct?

On October 15, 2012, the Arizona Board of Appraisal posted a notice to its website announcing that JVI Appraisal Division (Arizona registration #40075) “may have closed its business.”   The notice stated that the Board office currently has open complaints against JVI, and that the Board may be filing claims against the bond posted by JVI.

If you are an Arizona appraiser who is owed money by JVI, here is a link to the page with the notice:  http://www.appraisal.state.az.us/newsletter.aspx. This notice provides information about what an appraiser in this situation needs to do to file a complaint, e.g., who to contact and what information to include.

If you are not an Arizona appraiser, and you are owed money by JVI, check with your state’s appraisal board or commission to see if your state regulates AMCs in any way.  If so, you may be able to file a complaint in your state.  If not, you may need to turn to someone else in order to try to collect.  History has shown that defunct AMCs are very difficult to collect from (AppraiserLoft, Express Financial Services, and others come to mind) so be prepared to spend a lot of time attempting to collect, with limited prospects for success.

JVI’s website is still up and operating, but it is unknown if the company is still taking and placing appraisal orders at this time.

Pennsylvania Enacts AMC Registration Law

On February 2, 2012, Pennsylvania Governor Tom Corbett signed the Appraisal Management Company Registration Act (AMCRA), which had recently been passed by the state legislature. Thus Pennsylvania becomes the 30th state to enact a law regulating AMCs.

The new law was formerly known as House Bill 398, and its primary sponsor was Representative Richard R. Stevenson (R-Mercer County) who is also a certified general appraiser in the Commonwealth.

Some of the provisions of this new law include:

• An AMC that is applying for registration must provide name and contact information for any person who owns more than 10% of the company

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FDIC Sues Two AMCs: A Shot Across the Bow?

Separate federal lawsuits have been filed by the Federal Deposit Insurance Corporation (FDIC) against LSI and CoreLogic, two appraisal management companies (AMCs), seeking a total of $283 million in damages, related to non-performing loans made by Washington Mutual.  Specifically, the lawsuits allege negligence in providing appraisal services and multiple violations of USPAP.

According to information from The Subprime Shakeout blog, the FDIC alleges that they reviewed 292 appraisals obtained from LSI and found that 220 of those contained “multiple egregious violations of USPAP”.  In the case of CoreLogic, the FDIC alleges that 194 out of 259 appraisals reviewed contained multiple USPAP violations.

The blog article also stated that of those reviewed, only 3.4% of the LSI appraisals, and only 2.7% of the CoreLogic appraisals, were considered fully compliant.

Is this just posturing on the part of the FDIC?  How far will they pursue this lawsuit?

Or is this the beginning of something much bigger?  Are lawsuits like this against AMCs going to become commonplace?

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Fee Tug-of-War Continues

As the old cliché goes, there are very few things in life one can count on. Death and taxes are, of course, two of them. Here’s another: appraisers and AMCs will continue their tug-of-war over fees.

This back-and-forth wrangling is nothing new, but it has taken on an almost life and death importance for many residential appraisers. Years ago when AMCs controlled less than 20% of the market for residential mortgage appraisals, appraisers had the option to work with AMCs or not. If appraisers weren’t happy with low AMC fees, they had the option to pursue other clients, and many did.

The HVCC pulled the rope decisively on the side of the AMCs by gifting them with – by some accounts – an 80% to 90% share of the market. Appraisers who previously refused low-fee AMC work now found themselves turning to AMCs in an attempt to maintain their appraisal volumes.

The Dodd-Frank Act pulled the rope back towards the side of the appraiser by mandating that AMCs pay “customary and reasonable” fees, which were to be based on published fee schedules, surveys and/or academic studies that excluded fees paid by AMCs.

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Appraisers Ask: What Now?

By Daniel A. Bradley, SRA, CDEI

The hype and excitement for April 1, 2011 is now a memory. For appraisers who thought this date would bring about higher appraisal fees from AMCs and other clients, bitter disappointment has undoubtedly begun to set in. Appraisal-related blogs, message boards, and websites are trumpeting the news – it is just business as usual. The promise of higher appraisal fees turned out to be an April Fools’ joke on an entire profession.

So for residential appraisers, what now?

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Customary and Reasonable?